IMF Raises UK Growth Forecast Amid Economic Recovery Signs

LONDON — The International Monetary Fund (IMF) has upgraded its growth forecast for the U.K. in 2024 to 0.7%, up from a previous estimate of 0.5%. This positive adjustment comes as the new Labour government, led by Prime Minister Keir Starmer, implements fiscal reforms aimed at revitalizing the economy. The IMF also maintained its 2025 growth projection for the U.K. at 1.5%, following a period of stagnation and a shallow recession in late 2023. Recent economic indicators show a promising trend, with the U.K.'s GDP growth in May surpassing expectations at 0.4%. Anticipated events, such as the Euro 2024 soccer championship and Taylor Swift's Eras Tour, are expected to further stimulate economic activity. Investment bank Goldman Sachs has also revised its 2025 forecast for the U.K. economy upward to 1.6%, attributing this to the Labour government's plans for regulatory reform and enhanced trade relations with the European Union. Analysts from Jefferies noted that the Labour government's parliamentary majority could enhance the U.K.'s economic stability, making it a more attractive destination for investment. Concurrently, the Bank of England is expected to begin reducing interest rates, as inflation has reached the central bank's target of 2% and is projected to decline further. The IMF's global outlook reflects a mixed picture, with upgrades for several economies, including the euro zone and China, while the U.S. forecast was slightly lowered. The organization cautioned about rising inflation risks and the potential for prolonged high interest rates amid ongoing trade tensions and policy uncertainties.